Sam Sanders was looking forward to celebrating his girlfriend’s 30th birthday this summer with a trip to Japan, a country on the couple’s travel bucket list, where they planned to visit Mount Fuji and explore local cuisine and culture.
But with airline fares soaring amid higher oil prices tied to conflict in the Middle East, they decided it made more sense to postpone the trip for now.
“It felt a little out of control,” Sanders, a 31-year-old freelance journalist based in Washington, DC, said of traveling across the globe. “There is so much going on in the world right now.”
The pair isn’t alone. Almost two-thirds (65%) of Americans have changed their vacation plans because of rising prices; most are traveling shorter distances or changing their mode of transportation, according to an April survey from US News & World Report.
Concerns about increased air fares, reduced flights and gas price pressures on consumer wallets “have added some clouds to the US summer travel outlook,” says Aran Ryan, director of industry studies at Tourism Economics.
Turbulence Ahead
The travel industry has had a bumpy ride of late. Jet fuel prices have skyrocketed since the war with Iran began at the end of February, and that cost is often passed on to consumers: The average airfares for domestic and international flights starting in the US were $380 and $1,108, respectively, as of May 4, according to data from Kayak. That compares with $290 and $909 during the same time last year.
Airlines have also tried to protect their profit margins by cutting other costs or buoying revenue. Some, like JetBlue and United, have raised checked-bag fees. Others, like Delta Air Lines, are paring their flight schedules. (Delta also eliminated its snack service on short flights.) Not all have been successful. Budget carrier Spirit Airlines shut down earlier this month, partially blaming the surge in fuel prices.
About 37% of travelers attributed their altered plans to geopolitical tension, the US News survey found. Government travel advisories for certain destinations, including tourist sites in Mexico following cartel-related violence, represent just one such concern. Additionally, the deployment of up to 150 Immigration and Customs Enforcement (ICE) agents to airports across the country to ease Transportation Security Administration (TSA) inspection lines amid a partial government shutdown intimidated some prospective travelers. Viridiana Medina, who is 31 and Mexican American, says their presence is part of what prompted her to scrap a trip to Europe this summer and reconsider another trip to Mexico for a friend’s wedding.
“I’m a US citizen, but for the first time in a very long time, I am more self-conscious about how I look and what my name represents and being profiled, and what that means when I go to an airport, especially when traveling internationally,” says Medina, who’s based in Chicago. It’s disappointing, she says, since she enjoys immersing herself in other cultures, trying new things and experiencing new places. “But it just wasn’t worth the stress for me at this point. Being in places where your citizenship really comes into question, it’s just incredibly triggering and terrifying.”
Hotels, meanwhile, have their own challenges. Just look at demand (or lack thereof) for bookings ahead of the FIFA World Cup. The American Hotel and Lodging Association recently surveyed hotels across host cities and found that 80% of respondents say hotel bookings are tracking below initial forecasts. FIFA room-block cancellations, international travel barriers, and rising costs were the key drivers of lower demand, per the report.
Laissez-Faire Luxury
Rising costs and concerns about canceled flights or getting stranded away from home don’t affect all consumers equally. Luxury travelers are much less likely to change their plans, and airlines are leaning into that, says Jan Freitag, national director of hospitality analytics for the CoStar Group. In March, United revealed new cabin designs that offered more premium seats and fewer economy ones. Alaska Airlines, which has long been in the low-cost carrier category, recently launched its first-ever international business-class suites for long-haul flights. In April, Delta introduced its new Delta One suite, which will offer the airline’s largest seatback screens and, on certain flights, suites featuring privacy doors.
“Our consumer’s really healthy. We live at the top end of that ‘K’ that people talk about, the premium end of the ‘K,’” Delta CEO Ed Bastian told CNBC in March, referring to descriptions of a K-shaped economy in which high-income consumers thrive while others struggle. “That group of folks wants to travel. They’re investing in themselves; they’re investing in the experience economy.”
Their investments go far. The top 10% of households by income are expected to spend a collective $544 billion on travel in 2026. They take an average of 4.3 leisure trips annually, compared with the 2.8-trip average for US travelers overall, according to a report by Resonance Consultancy.
Over the Horizon
Freitag doesn’t seem concerned about the travel outlook moving forward. While all travelers are living in uncertain times, “we’ve said that since the pandemic,” he explained. “People get a little bit numb to the noise of the news.”
In other words, summer travel slowdowns are probably not indicative of long-term trouble for the travel industry. US travel spending is expected to grow 1% on an inflation-adjusted basis in 2026, accelerating to 3% in 2027 and 2028, according to a recent forecast from the US Travel Association. The non-profit says total travel spending is expected to hit an inflation-adjusted $1.37 trillion this year and $1.42 trillion in 2027, and that domestic travel accounts for 87% of that total.
Potential risks for those figures? Prolonged conflict in the Middle East (and its impact on energy prices) and dwindling consumer confidence. For international flights, tack on worries around a rise in visa fees, long wait times for visa applications and renewals and negative sentiment toward the US.
Written by Mallika Mitra
